We'll have to learn to make do with what's on our planet, instead of continuing on the current path in unrealistic hopes of serving on the USS Enterprise.
(1) We use factories and raw materials to build space station modules.
(2) We create and expand space stations in Earth orbit by launching modules via rockets.
(3) We can build and add additional modules to increase the crew capacity of the station.
(4) We grow plants and manufacture things (in small quantities) on the station.
(5) We live (in small numbers) on space stations for years given enough crew space and constant coordination and resupply shipments from Earth.
(6) The amount of people and equipment directly involved in any particular Earth industry is finite.
(7) We protect volumes from the hazards of space (vacuum, temperature, micro-meteors, radiation) by armoring their surfaces with factory-made materials.
(8) We could continue (2 and 7) until the station is armored enough to allow its inhabitants and equipment to survive beyond Earth's magnetic shield.
(9) Given (5), we could continue (2 and 3) until the station has enough people (6) to self-co-administer, at which point it only needs resupply shipments from Earth to sustain itself.
(10) We could continue (2 and 4) until the station has enough factories and refineries for (1), provided it has raw materials from Earth or asteroids.
(11) We could build one or more hospital modules to facilitate safe human births on the station, perhaps in a rotating section, so new humans can replace the old.
To accomplish these points, we require no additional advances in technology, only our sustained effort. Humanity could live and grow endlessly in large space stations that run on solar power and build with raw materials from asteroids, comets, moons, or planets.
We can grow plants on Earth, why would we do it in orbit.
As for some reasons to grow, or manufacture really, things in orbit, landmass is one reason. There is a whole lot of real estate up there that we don't really have access to on earth. There is also the ability to send down materials to anywhere on earth without requiring a huge transportation network that causes things like roadway congestion. On top of those, building facilities that do heavy amounts of nasty polluting become less of a concern. It's not really as much of an issue to dump a bunch of toxic stuff into space compared to say, a river. I suspect nuclear power plants also start to become more viable as there is less of a worry over meltdowns as you're already surrounded by massive amounts of radiation and have no population to evacuate.